A cascade of trade sanctions against Moscow has been instituted due to the Russia-Ukraine conflict, resulting in Russia becoming the most sanctioned country with over 5,500 sanctions.
In the midst of the flurry of new regulations, the U.S. Treasury Department has begun targeting sanction evaders. That is, individuals and entities intentionally attempting to circumvent these sanctions. Organizations must regularly screen any entities they work with against denied parties lists to guarantee business partners are not involved in evading sanctions. However, conducting sanctions screening is a complex task due to intentionally complex networks created by sanctioned parties.
What is the United States doing to identify and block financial networks designed to evade trade sanctions? How can organizations avoid inadvertently working with blocked parties? The following might be helpful.
Sanction Evaders Targeted by U.S Treasury and Allies
The European Union, G7 nations, and the United States have created an information-sharing agreement to assist each other in identifying sanction evaders. That comes as networks have already been established by sanctioned parties to circumvent international sanctions.
One such network has been identified by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) as being created by Russian oligarch Konstantin Malofeyev. The Department of Justice has since charged the oligarch with conspiracy to violate U.S. sanctions.
Furthermore, multiple individuals and entities have been identified as connected to Malofeyev’s financial network, including family members, employees, and organizations, according to OFAC.
Businesses should certainly be aware of the global sanction evasion network created by Malofeyev, but it’s also an example of what other denied parties may have created. As a result, organizations across industries must conduct restricted party screening to ensure that the trade chain parties they are working with are legitimate and above board.
Organizations Owned by Sanctioned Parties Are Vulnerable
Identifying sanction evaders becomes even more difficult due to the OFAC 50% rule. This rule states that any business entity with a 50% ownership stake by a sanctioned party should also be considered a blocked party.
Unfortunately, there is no central government list for organizations to consult, making the compliance process even more difficult.
Restricted party screening conducted without the appropriate software, therefore, is unlikely to be accurate. Therefore, organizations of all sizes should use software that includes sanctioned ownership screening to identify parties affected by the OFAC 50% rule. Otherwise, businesses may find themselves unwittingly working with sanctioned organizations.
Sanctions Screening Software is Necessary Across All Industries
International sanctions have targeted Russian businesses involved in nearly every industry. And sanctions screening is a specific process that helps international organizations ensure they are not working with blocked entities.
Denied party screening software is designed to identify sanctioned entities and known evasion networks that may exist anywhere in an organization’s supply chain and trade partnerships. For example, Russia has extensive ties to major industries from aerospace and automobiles to agriculture and paper. Therefore, every organization must consider itself at risk and screen its supply chain for any blocked parties.
Fortunately, sanction screening software is constantly updated with information on new sanctions and known evasion networks. This type of software uses multiple, official sources of information to determine if any entities are targeted by sanctions or are known sanction evaders.
You Need the Right Software to Avoid Blocked Entities
Your supply chain must be continually analyzed to guarantee you are not inadvertently transacting with blocked businesses or individuals. Descartes offers potent software solutions that are constantly updated with new sanction data to help you identify any suspicious activity that may relate to sanction evaders. Reach out to us today to learn how our sanction screening software can keep you safe and compliant.
To help manage compliance risks more effectively, we provide a range of robust denied party screening and 3rd party risk management solutions as well as comprehensive and trusted trade content for leading business systems such as SAP, Oracle, Salesforce and NetSuite to name a few.
Descartes compliance solutions are flexible and modular, allowing organizations to pick the specific and exact functionality and content they need and scale up later as and when necessary. By utilizing these solutions, organizations can strengthen their compliance processes, enhance their competitive edge and increase sales velocity.